US regional airline Air Wisconsin Airlines has entered a five-year capacity purchase agreement with American Airlines, which becomes effective no later than March 2023. The regional carrier shifts capacity to American Eagle from United Airlines, as the current contract with United is expected to be terminated soon. The agreement with American was concluded on August 19 but announced today in an SEC filing. American adds regional capacity with Air Wisconsin deal.
Air Wisconsin has been a long-term feeder airline for United Airlines and United Express in the Midwest and East Coast with a fleet of 64 Bombardier (now Mitsubishi) CRJ-200 50-seaters. Currently, 51 aircraft are in active service, with the other thirteen parked. Under the United Next strategy that the carrier announced in June 2021, United wants to upgauge capacity by replacing small 50-seaters with bigger aircraft. For this reason, it ordered 200 Boeing MAX and 70 Airbus A321neo aircraft last year. These aircraft will be coming in from next year through 2026.
In a clever move by American Airlines, it takes the excess capacity that United leaves at Air Wisconsin with the fleet of CRJ-200s. In the first phase of the agreement, Air Wisconsin will provide 40 CRJ-200s to American Eagle, with a specific number of aircraft becoming available each month between March and October 2023.
Air Wisconsin joins the American Eagle family, of which PSA Airlines already is a member with the Bombardier CRJ-700 and -900. (PSA Airlines)
“Initially, Air Wisconsin will provide regional airline services for American primarily based at Chicago O’Hare, one of American’s key domestic hubs, with possible future expansion to other hubs”, the SEC filing says. “American will pay Air Wisconsin fixed daily revenue for each aircraft covered under the Agreement (subject to Air Wisconsin’s ability to meet certain block hour utilization thresholds), a fixed payment for each departure, and a fixed payment for each block hour flown, in each case subject to annual increases during the term of the Agreement based on a fixed payment schedule. Air Wisconsin will also be eligible to receive incentive compensation, and will be required to pay rebates, upon the achievement of, or failure to achieve, certain pre-established performance criteria.”
Air Wisconsin may also add up another 20 CRJ-200s, but that’s subject to satisfying certain minimum block hour utilization thresholds. “The Agreement provides that the parties may discuss the possibility of adding CRJ-700 regional jets to Air Wisconsin’s fleet for the purpose of providing regional airline services under the Agreement, but neither party is under any obligation with respect to these additional aircraft.”
There is another key reason for American to partner with Air Wisconsin. The airline adds 1.100 staff to AA’s regional operations, notably pilots, which have been short-staffed at many US regional carriers. In a message to staff, American’s Chief Financial Officer, Derek Kerr, says that it will take some time to solve this shortage. But Air Wisconsin “will be a fantastic addition to the American Eagle family”, says Kerr, which consists of Republic Airways, Mesa, Piedmont, PSA Airlines, Envoy, and SkyWest Airlines.
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
In 2022, he has gone full-time freelance. Richard has been contributing to AirInsight since December 2018. He is also writing for Airliner World and Aviation News. From January 2023, he will add a part-time role with Dutch website and magazine Luchtvaartnieuws. Twitter: @rschuur_aero.